Another bubble?

Posted on July 14, 2017 by grim

From Forbes:

Home Prices And Buyer Competition Hit New Highs in June

U.S. home prices rose 7.3 percent to a median sale price of $298,000 in June, according to Redfin, the next-generation real estate brokerage. This is the highest national median sale price Redfin has recorded since the company began keeping track in 2010.

Home sales increased 1.9 percent compared to last year, constrained by a long-standing inventory shortage. The number of homes for sale fell 10.7 percent, leaving just 2.5 months of supply—the lowest supply on record since 2010—and well below the six months that represents a market balanced between buyers and sellers.

Every record in market speed and competition that was set in May was broken again in June. The typical home that sold in June went under contract in 36 days, one day faster than in May, setting a new record-fast pace for home sales. Denver, Portland and Seattle were the fastest-moving markets, with the typical home in each market finding a buyer in just seven days. More than a quarter (26.6%) of homes sold above their list price, the highest percentage Redfin has recorded. The average sale-to-list price ratio hit a record high of 95.5 percent in June.

“This market is unlike any we’ve ever seen before,” said Redfin chief economist Nela Richardson. “Month after month, new records are set for the pace at which homes are going under contract. Demand continues to swell while supply troughs. For buyers competing in this market, it’s survival of the fittest. The strongest offers that are most likely to close quickly and smoothly rise to the top of the pile.”

Posted in Economics, Housing Bubble, National Real Estate | 40 Comments

Prices up in Westchester and the Lower Hudson Valley

Posted on July 13, 2017 by grim

From LoHud:

Home prices in region rise as inventory drops, report finds

Prices of single-family homes rose throughout the Lower Hudson Valley region in the second quarter, with the number of homes available for sale continuing to dwindle, according to the real estate sales report released Monday by the Hudson Gateway Association of Realtors.

Dorothy Botsoe, president of HGAR and the owner of Dorothy Jensen Realty in White Plains, said the market condition is frustrating some prospective buyers, particularly those people who are trying to enter the housing market for the first time.

“Buyers are trying, but they can’t even get their foot in the door because when they see the property and before they can make a reasonable offer, there are multiple bids,” Botsoe said.
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The median sale price for single-family homes in Westchester was $670,000 in the second quarter, up by 3.1 percent from the same period last year, when the figure was $650,000.

In Rockland, the median price rose to $441,387, up by 2.6 percent from a year ago when the figure was $430,000. And in Putnam, the median rose by 9.9 percent, from $314,000 last year to $345,000 this year.

The pace of the price increase over the past five years in Rockland is noteworthy. The 2017 second-quarter median for single family homes, $441,387, was 13.2 percent higher, or $51,387 more, compared to the 2013 figure, $390,000.

The price hike is driven by the ever-shrinking housing supply, experts agreed.

The HGAR report stated that prospective home buyers are “operating in a market that has seen tremendous reductions in the supply of for-sale housing over the past four years.”

Posted in Demographics, Economics, Housing Recovery | 62 Comments

50 years later

Posted on July 12, 2017 by grim

From the Star Ledger:

Race, riots and reputation: Has N.J.’s largest city recovered?

To this day, you look at so many of the abandoned buildings, the light manufacturing, the old jewelry business, you walk around downtown, you still see the old, faded, painted signs on the buildings — and it harkens back to a different time.[1]

But it definitely seems to me to be a very different kind of attitude right now about Newark. [2]

As the image of Newark as “riot city” recedes into the background, people are beginning to see that there’s some assets here that they can take advantage of. [3]

The question is, how does Newark brand itself? How does it portray itself in terms of remaking its image?[4]

To some extent, it depends on whom we are talking to. If you are talking to some suburbanites who have very little contact with Newark, Newark is still this crime-ridden, disease-ridden place.

People who have some contact with Newark have a more nuanced view. They see pockets where Newark has come back. They do see some neighborhoods that are, in fact, stable. [5] Perception is often more important than reality, people’s perceptions was what happened in 1967. [1]

This taxi cab driver being brutalized by the police — people just decided to revolt. [6] And then eventually it broke out into something much bigger: A full fledged riot.

People out of control and setting fire to everything they could. [7] The stores, the windows, the glasses being kind of shattered or broken. Debris all over, stores looted out, emptied. [4]

There were three police forces here, we had the local police, the National Guard and we had the state police. [3] Cops back and forth. Firefighters. Chaotic, chaotic. And hearing gunfire, that was the thing that sticks with you most, is hearing “pop, pop, pop.” You know it’s not firecrackers, those are shots. And then you saw your city, the city that you love, going up in flames. [8]

Everybody knew where Newark was because of the riots. [9] Part of the stigma attached to Newark comes from that, from wanting to see the riot as the cause of all of the urban decline when in fact, you had these issues before. [5]

Posted in Demographics, Economics, New Jersey Real Estate, Unrest | 75 Comments

Hide the Zombies?

Posted on July 11, 2017 by grim

From the South Jersey Times:

Don’t give N.J. zombie homes the upper hand

Owing to its ongoing high rate of residential foreclosures, New Jersey has become known the Land of the Zombie Houses. If a just-filed lawsuit succeeds, the zombie fighters — our towns and counties — will find it much tougher to fend off the attack.

And it’s a horrible idea to let the zombie enablers win.

Those enablers include investors who snap up vacant housing stock at tax and mortgage default sales, hoping to make a killing by flipping the properties. Of course, that’s a perfectly legitimate, even desirable, way, to get the homes occupied and paying property taxes on time.

But a group of lien buyers want to overturn vacant-property registry ordinances enacted by towns fed up with owner-unoccupied homes for which no one seems to be responsible. Gloucester County set up a novel countywide program to help its towns to establish these registries in 2015. The county should be applauded for helping towns know who is responsible for maintenance and security while these properties sit idle in foreclosure limbo. Instead, four of the towns — Deptford, Glassboro, Monroe and Paulsboro — are targeted by the litigation.
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We’ll concede that we don’t know enough about New Jersey foreclosure and tax-sale law to say that the investors who filed the litigation don’t have a valid point or two. They claim in Superior Court, Gloucester County, that the fees are excessive and conflict with existing law that supposedly outlines all charges connected with buying tax lien certificates. Many zombie homes, though, are still owned by banks and mortgage lenders, who are not subject to the certificate redemption fees.

What’s most alarming is the suit’s claim that registration programs are themselves unconstitutional because the state Legislature has not enacted strict parameters for them. The programs involve mainly information that is public — that is, property ownership records — but this information often changes too fast for public databases to keep up.

Any mayor with a boarded-up housing problem can tell you that it can take just a few summertime weeks for insect-harboring weeds to grow to alarming heights or for illness-generating mold to overtake walls. A couple of cold winter nights could entice squatters into empty, inadequately secured homes.
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The New Jersey State League of Municipalities maintains that towns have the constitutional right to create vacant property registration ordinances. The league should take the lead in defending the towns. Meanwhile, the Gloucester County municipalities that were sued can bolster their case with real-world examples showing that the programs work — and have enabled a rapid defense against eyesores, rodent infestations, fires, drug dens and general neighborhood blight.

Posted in Foreclosures, New Jersey Real Estate, South Jersey Real Estate | 80 Comments

The negative equity gap

Posted on July 10, 2017 by grim

From DSNews:

Does Home Price or Location Impact Underwater Mortgages?

In total, 1.8 million American homeowners currently owe more on their home loans than their property is worth. Though this is the first time the number has dropped below 2 million since 2006, it’s still much higher than pre-crisis levels. At the end of 2005, just 750,000 borrowers owed more than their home was worth.
According to Ben Graboske, EVP of Data & Analytics at Black Knight, rising home prices are continuing to improve homeowners’ equity stakes.

“This is plainly visible in the number of borrowers who are underwater on their mortgages, owing more than their homes are worth,” Graboske said. “Over the past year, we’ve seen a 35 percent decline in the total underwater population, with a 16 percent decline in that population over the first three months of 2017 alone. Home prices rose 2.3 percent in the first quarter, as compared to 1.8 percent over the same period last year, helping an additional 350,000 borrowers regain equity in their homes.”

The report also showed that almost half of all borrowers with negative equity own homes in the lower 20 percent of the market, price wise. In fact, homeowners in this price tier are twice as likely to be underwater as those one tier up and a whopping 6.5 times more likely than Americans who own homes in the top 20 percent price range. That’s the highest differential in negative equity since Black Knight launched its Mortgage Monitor in 2005, Graboske said.

“What stands out is the disparity we see in this improvement,” Graboske said. “As has been the case for some time now, negative equity has become more and more a localized phenomenon. But it’s also becoming concentrated among a particular class of homeowner. Nearly half of all borrowers who remain underwater own homes in the lowest 20 percent of prices in their respective markets. While the nation as a whole now has a negative equity rate of just 3.6 percent, among owners in that lowest price tier, it’s over 8 percent.”

Underwater borrowers also tend to be more concentrated in geographic areas, according to the report, which shows that Detroit, Cleveland, and Memphis, Tennessee, account for more than 25 percent of all underwater borrowers in the lowest price tier. Detroit borrowers with a home in the bottom price tier are also 50 times more like to be underwater than those whose homes are in the top 20 percent.

Posted in Demographics, Economics, National Real Estate | 93 Comments

NJ’s Non-gentrified Urban Future

Posted on July 9, 2017 by grim

A glimpse into what NJ’s urban future will look like. Ever increasing property taxes will create a situation where the urban poor can no longer afford to even pay their property taxes, leading to property tax foreclosures in massive numbers.

NJ’s rapid increase in property taxes over the last 15 years has barely even been mentioned as a factor in driving foreclosures during the crisis, but it’s absolutely the fact. Rapidly rising tax payments create an identical situation to resetting adjustable rate mortgages and unexpected increases in monthly payments … without corresponding increases in wages.

So take a good look NJ, because you are looking at the future of NJ’s cities.

From the Detroit Metro Times:

Here is a horrifying map that shows every Detroit tax foreclosure since 2002

We all know tax foreclosures are a problem in Detroit, but this map from Loveland Technologies really puts the horror of the situation into perspective. Shown are all of the properties that have been foreclosed and sold at auction in the city over the past 15 years.

Michigan law allows for the foreclosure and seizure of properties with three or more years of back taxes. The properties then get sold at auction to try to recoup some money lost. People then get displaced. The houses they lived in then sometimes go vacant. Vacancy leads to blight. Blight leads to depressed property values. You see the problem.

Wayne County has foreclosed on more than 160,00 properties since 2002, with the bulk of them in Detroit.

Posted in Demographics, Economics, Foreclosures, New Jersey Real Estate, Property Taxes | 25 Comments

Better by 2018? Not likely.

Posted on July 7, 2017 by grim

From NJ Spotlight:

NEW JERSEY’S ECONOMIC OUTLOOK FOR 2018 IS SO-SO, ACCOUNTANTS SAY

Despite New Jersey’s solid year of job growth in 2016, a recent survey of the state’s certified public accountants suggests few of them believe economic conditions will improve much by next year.

The results of the survey, released yesterday by the New Jersey Society of Certified Public Accountants, indicated just under 25 percent of those who responded to the organization’s member poll predicted economic conditions will get better by 2018.

Instead, the overwhelming majority of the accountants who responded said they believe that conditions here will either stay the same or get worse, the survey found.
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While New Jersey hasn’t had any setbacks to annual job growth since the recession officially ended in 2009, the state has been adding about 45,000 jobs each year, a pace that has lagged both the national recovery and the rate of growth experienced during the 1990s as New Jersey rebounded from a prior recession, according to figures tracked by Rutgers’ Bloustein School of Planning and Public Policy. But last year, the state added more than 60,000 private-sector jobs, its best showing since the recession ended.
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In addition to the economic-outlook question, the accountants were also asked in the survey to list their top three recommendations for creating economic growth in New Jersey. Nearly 80 percent listed reducing property taxes among their top three. High property taxes have long been a key concern in New Jersey, and the latest data from the state Department of Community Affairs indicates the average property tax bill increased by nearly $200 in 2016 to $8,549.

Other top recommendations for stimulating growth in New Jersey revealed in the CPA survey were cutting income taxes and providing additional tax incentives to businesses.
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Thomas said he’s now hoping that legislators, candidates and the general public will take a close look at the results of the survey, and give serious consideration to the issues raised by it as upcoming policy decisions are made in Trenton.

And while the group has no plans to take political positions or endorse any candidate, it is urging policymakers to adopt a long-term view as they take on the state’s biggest problems instead of enacting just short-term Band-Aids.

Posted in Demographics, Economics, Employment, New Jersey Real Estate | 46 Comments

Price cuts move properties

Posted on July 6, 2017 by grim

From Bloomberg:

Manhattan Home Sales Surge as Cuts Bring Prices to Buyers’ Level

Manhattan homebuyers found deals they couldn’t refuse in the second quarter, driving up sales of previously owned properties by the most in more than two years.

Purchases of resale homes jumped 16 percent from a year earlier to 2,597, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Buyer interest was fueled by average price cuts of 6.1 percent across all property types. The last time the average discount was larger was the third quarter of 2012, when it was 7.2 percent.

Sellers of luxury apartments took the whittling further, cutting prices by an average of 10 percent, the most since the end of 2010 and the second-biggest discounts in more than 16 years of record-keeping.

“The sellers definitely got it,” said Diane Ramirez, chief executive officer of brokerage Halstead Real Estate, which released its own report Thursday saying there was a 28 percent jump in resales in the second quarter. “They said, ‘We’ve got buyers out there who are serious but that are not moving forward, so let’s give them a reason to move forward.’”

Manhattan home shoppers held back last year, uninspired to commit to a purchase when sellers were holding fast to their lofty asking prices, even as inventory climbed. A rising stock market since the U.S. presidential election sparked fresh interest in browsing, and sellers sensed an opportunity to offload apartments that had been lingering.
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“Our market cannot support aspirational pricing by sellers waiting for that ‘one buyer’ who will overpay for their home,” Warburg’s Peters said in his note. “Buyers are as price-conscious as I have ever seen them.”

Posted in Demographics, Economics, NYC | 31 Comments

No slow down in May

Posted on July 5, 2017 by grim

From CoreLogic:

CoreLogic US Home Price Report Shows Prices Up 6.6 Percent in May 2017

CoreLogic® (NYSE: CLGX), a leading global property information, analytics and data-enabled solutions provider, today released its CoreLogic Home Price Index (HPI™) and HPI Forecast™ for May 2017 which shows home prices are up strongly both year over year and month over month. Home prices nationally increased year over year by 6.6 percent from May 2016 to May 2017, and on a month-over-month basis, home prices increased by 1.2 percent in May 2017 compared with April 2017,* according to the CoreLogic HPI.

Looking ahead, the CoreLogic HPI Forecast indicates that home prices will increase by 5.3 percent on a year-over-year basis from May 2017 to May 2018, and on a month-over-month basis home prices are expected to increase by 0.9 percent from May 2017 to June 2017. The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.

“The market remained robust with home sales and prices continuing to increase steadily in May,” said Dr. Frank Nothaft, chief economist for CoreLogic. “While the market is consistently generating home price growth, sales activity is being hindered by a lack of inventory across many markets. This tight inventory is also impacting the rental market where overall single-family rent inflation was 3.1 percent on a year-over-year basis in May of this year compared with May of last year. Rents in the affordable single-family rental segment (defined as properties with rents less than 75 percent of the regional median rent) increased 4.7 percent over the same time, well above the pace of overall inflation.”

“For current homeowners, the strong run-up in prices has boosted home equity and, in some cases, spending,” said Frank Martell, president and CEO of CoreLogic. “For renters and potential first-time homebuyers, it is not such a pretty picture. With price appreciation and rental inflation outstripping income growth, affordability is destined to become a bigger issue in most markets.”

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 42 Comments

So much for the summer job

Posted on July 3, 2017 by grim

From Time:

Where Did America’s Summer Jobs Go?

It’s not like the jobs aren’t there. The ice cream still needs scooping. A Tilt-a-Whirl doesn’t run itself. And that floppy, weirdly heavy rubber frog that somersaults toward the rotating lily pads? Hit or miss, someone’s got to bring it back to the catapult for the next lucky player. The work of an American summer remains, sticky and sweet as cotton candy, which doesn’t sell itself either.

But when Jenkinson’s Boardwalk went looking for seasonal employees last year, the response was not at all what the company expected. To fill some 1,200 summer vacancies, an Easter-time job fair drew just 400 people.

Applications did bounce up this year, but not nearly enough to reverse a grave trend that summer employers have noticed well beyond the Jersey Shore.

“It is getting harder to find students that will work,” says Toby Wolf, director of marketing at the boardwalk. “Each year it’s getting harder and harder. None of us has been able to pinpoint why. Is it a change in society as a whole?”

This is a question to chew over on the long road trip from Glacier National Park–where concessions could be staffed by Bulgarians on work-study visas–to Maine, which each summer struggles to fill the lifeguard chairs above its beaches. The same story holds at the water attractions at Wisconsin Dells and on Cedar Point’s roller coasters in Sandusky, Ohio. As a nation, we have lately endured the demise of comity and the fracture of factual truth. Are we now witnessing the slow death of the summer job?

The numbers are not encouraging. Forty years ago, nearly 60% of U.S. teenagers were working or looking for work during the peak summer months. Last year, just 35% were. Note the element of declaration: what the U.S. Bureau of Labor Statistics (BLS) tabulates are reports of actually desiring work during the months when most high schools and colleges are off. It is a statement of intent. Plotted on a chart, the decline is unmistakable and, since the turn of the new century, precipitous–plummeting 15 points in 15 years, to where we are now: only about every third youth working or looking for work this summer.

Posted in Economics, Employment, National Real Estate, Shore Real Estate | 57 Comments

March 2019? Yeah, right.

Posted on June 30, 2017 by grim

From the Record:

American Dream Meadowlands finalizes $2.8B in construction financing; work resumes

A complex $2.8 billion closing on construction financing for American Dream Meadowlands was completed on Thursday, locking in the funds developers say they need to finish the long-delayed project.

The financing includes a combination of private funds and a $1.1 billion bond sale.

“We’re finally at the point where we don’t have to say ‘when’ – we can say, ‘It is happening’ – and that’s why we’re celebrating,” said New Jersey Sports and Exposition Authority President Wayne Hasenbalg.

Also celebrating Thursday was East Rutherford Mayor James Cassella, whose borough received a check from project developer Triple Five for $21.5 million upon the final closing Thursday morning.
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That payment was part of a financial agreement that includes an annual payment in lieu of taxes deal for the project, which sits on state-owned land at the Meadowlands Sports Complex. It is scheduled to open in March 2019.

The bulk of the funds will go to paying off the annual debt service on a new police and court building complex that the borough built in 2010.

Cassella, who already was mayor when the project was first approved by the state in 2003, said it was a relief to see the deal close “after 14 years, three developers, nearly a dozen agreement drafts, and innumerable hours of negotiations.”

Posted in New Development, New Jersey Real Estate | 90 Comments

Time for Newark

Posted on June 29, 2017 by grim

From the Commercial Observer:

Five Reasons to Pay Attention to Newark

Of all the commuter cities west of the Hudson River, Newark, N.J., gets the least respect from real estate professionals.

Some of the reasons for this are understandable; Newark is more of a pain in the posterior to commute to than Jersey City. It doesn’t have the stock of brownstones of Hoboken. The city was devastated by riots a half-century ago and never quite regained its footing.

But those objections look puny when you consider that major real estate players like Edison Properties and Lotus Equity Group and basketball legend Shaquille O’Neal are investing tens of millions of dollars into hundreds of thousands of square feet of real estate. And the fact that the crime rate is the lowest it’s been since 1967.

“We think the way to change the dynamic is to create critical mass,” Ben Korman, the chief executive officer and founder of Lotus, told Commercial Observer. “It can’t happen organically.” And Korman is not the only one doing his part.
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Beit started assembling lots for the project in 2005. The idea behind Teachers Village was that education and educators would be at the heart of the project. “Our goal is to get 70 percent teachers [as residents],” Beit said. They’ve marketed it directly to educators and found that the reaction has been extremely positive. “Just the fact that we have a community for them makes teachers feel supported.”

All but a handful of the apartments are leased, and Beit is gearing up for the next phase of his master plan: Four Corners, three ground-up buildings consisting of a 130-key hotel, 107 rentals and retail, which he’s aiming to have finished in the second quarter of 2019.
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Can an area gentrify without the requisite Whole Foods? Well, Newark won’t need to worry about finding out. A 30,000-square-foot Whole Foods opened earlier this year at the old Hahne & Company building, just across Military Park from the New Jersey Performing Arts Center (NJPAC).

But the Whole Foods is only one reason to get excited about that particular building; it is the anchor of the 115-year-old, 400,000-square-foot namesake department store (with another 100,000 square feet tacked on) that had been vacant since the 1980s and has been converted into a mixed-use extravaganza.

“Rutgers [University] is taking about 50,000 square feet for a collaborative arts space,” said Jonathan Cortell, the vice president of development for the building’s developer, L+M Development. “They’re one of the vital anchors of the project.” But there’s more: Chef Marcus Samuelsson of Red Rooster is opening up a 2,250-square-foot restaurant on the project’s Halsey Street border. There’s also a Petco; a Kite + Key (the Rutgers equivalent of an Apple store); and a coworking space all in the works.
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However, the stadium made for an enticing piece of real estate for Lotus’ Korman, who is taking a big swing at the property when he picked up the stadium last fall for $23.5 million.

The plan that Korman has drawn up is for a 2.3-million-square-foot mixed-use development, consisting of housing, office, retail and cultural space. (Sorry, baseball lovers; the stadium will be razed.)

“We’re doing everything we can to break ground in 2019,” Korman said. “We hope to start the permitting process later this year.”
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“Brooklyn has a lot of housing and not much office presence,” Korman noted. “It’s the opposite problem here.”

Amen to that.

The list of corporate behemoths that have chosen Newark as their home would impress the most skeptical observer: Prudential has their world headquarters in Newark. (The insurer has been in the city since the 19th century, and the city’s indoor arena that opened in 2007 and hosts the New Jersey Devils is named the Prudential Center.) There’s Audible, which has 1,000 employees and is gearing up to expand its office space dramatically. (Last month, The New York Times ran a story about how Audible was paying $2,000 a month in free rent at the Hahne Building for 20 of its lucky employees as part of a housing lottery.) Panasonic’s North American headquarters is in Newark.
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Richard Meier isn’t the only Newark son who came back to make his mark on his hometown’s skyline.

Basketball legend Shaquille O’Neal has also returned to spread some of his largesse with the under-construction One Rector, the 168-unit rental on which he is a backer along with Boraie Development.

The $75 million ground-up project adjacent to NJPAC will feature market-rate studios starting at $1,400 per month, one-bedrooms beginning at $1,700 per month and two-bedrooms starting at $2,300 monthly. “It’s an affordably priced building,” said Wasseem Boraie, the vice president of development at Boraie.

Of course, O’Neal has been “involved with a lot of things in Newark,” Boraie said. “We developed a movie theater, CityPlex 12, with him.” This replaced a six-screen Loews multiplex a few years ago. As for One Rector, the project is expected to be completed next year.

Posted in Demographics, Economics, New Development, New Jersey Real Estate | 50 Comments

Say it ain’t so

Posted on June 28, 2017 by grim

From the Washington Post:

The McMansion, ultimate symbol of the pre-recession boom, is back

If there’s anything that typifies the boom times before the Great Recession, it is the McMansion. These sprawling houses proliferated around the country in the 2000s, as banks shelled out easy credit to fuel a housing bacchanalia they thought would never die.

McMansions became the ultimate symbol of living beyond one’s means. Unlike your standard mansion, McMansions aren’t just large – they are tackily so. Looming over too-small lots, these cookie-cutter houses are often decked out with ersatz details, like chandeliers and foam-filled columns. While their features mean they can command a decent price, many of these houses are shoddily built.

During the recession, their construction ground to a halt. Today, McMansions are not exactly cool, especially compared with the exposed-brick urban lofts young people today will pay exorbitant prices for. But with the recent recovery of the housing market, they are coming back anyway.

As Americans have started building and flipping houses again, they are once again buying McMansions. Since 2009, construction of these homes has steadily trended upward, data from Zillow, a real estate website, shows. The median home value of McMansions is also rising, at a pace that eclipses the value of the median American home.
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Many casual onlookers have forecast the death of the suburbs in recent years, especially as younger renters and buyers turn an eye to city centers. Skylar Olsen, a senior economist at Zillow, says that young people today have far more interest in living in urban environments. “That’s where jobs had been growing fastest over the course of this economic recovery over the past five years,” says Olsen.

Yet younger people who are starting families are still moving to the suburbs for more room, she says. About half of all millennials that purchased a home last year did so in the suburbs, according to Zillow data.

Their decision is also supported by cheap energy costs, which make it affordable to commute. in mid-June, the nationwide average price of regular gasoline was $2.32 a gallon. Like the McMansion and the pickup in the housing market, it’s another source of deja vu. After remaining elevated for years, oil prices are now roughly the same as they were June 2000, when adjusted for inflation.

Kate Wagner, an architecture critic, wishes America would have learned its lesson about McMansions the first time around. She spends her free time tearing apart their architectural anachronisms on her blog, McMansion Hell.

Posted in Economics, Housing Recovery, National Real Estate, New Development | 68 Comments

May Otteau MarketNEWS

Posted on June 27, 2017 by grim

From Otteau Group:

NJ Purchase Contracts Bounce Back in May

After recording a 7% decline in April, home purchase contracts in New Jersey increased by 11% compared to the same month last year. Given the 9% increase during May of 2016, home sales have increased by 21% over the past 2 years. This latest gain was the highest number of purchase contracts recorded in the month of May of the past 12 years, signaling high demand. Overall, home sales have increased in New Jersey by 6% ytd.

While the number of home sales has increased across all price ranges this year, the largest gain has occurred for homes priced between $1.0-Million – $2.5-Million, which have increased by 12%. Home sales in excess of $2.5-Million have also been increasing for the first time in more than a decade. The gains for more expensive homes is attributable to the greater number of homes for sale in these price ranges compared to the tight inventory situation for less expensive homes which is putting constraints on sales volume.

Shifting to the supply side of the equation, the supply of homes being offered for sale remains constricted, which is limiting choices for home buyers. The number of homes being offered for sale today in New Jersey has declined by nearly 7,400 (-14%) compared to one year ago. This is also about 28,100 (-38%) fewer homes on the market compared to the cyclical high in 2011. Today’s unsold inventory equates to 3.8 months of sales (non-seasonally adjusted), which is lower than one year ago when it was 4.8 months.

Currently, all of New Jersey’s 21 counties have less than 8.0 months of supply, which is a balance point for home prices. Hudson County continues to experience the strongest market conditions in the state with just 2.4 months of supply, followed by Essex, Middlesex, Union, Passaic, Monmouth, Bergen, Morris, Burlington, Mercer, Somerset and Camden Counties, which all have fewer than 4.0 months of supply. The counties with the largest amount of unsold inventory (6 months or greater) are concentrated in the southern portion of the state including Cumberland (6.0), Cape May (6.5), Salem (7.4) and Atlantic (7.4), however, these counties are also beginning to exhibit strengthening conditions.

Demand for rental apartments remains strong in NJ with statewide occupancy rates being among the highest in the US. While Central NJ continues to have the lowest vacancy rate in the state (2.3%), it increased by 10 basis points from the prior quarter. The Philadelphia/Southern NJ region now has the highest vacancy in the state (3.8%), up by 20 basis points from the prior quarter, while vacancy in Northern NJ declined by 20 basis points to 3.6%. Nationally, the average vacancy rate increased by 10 basis points from the prior quarter and now stands at 4.3%.

A driving force for the apartment market sector is that the percentage of New Jersey households with children living at home has steadily declined to 35% today, with continued declines likely in the future.This trend, which is rooted in New Jersey’s economic conditions, is anticipated to drive future housing demand increasingly toward smaller homes including multi-family housing in more urban locations. At the present time, 65% of households within the state of New Jersey have no children under the age of 18 living at home.

Posted in Demographics, Economics, New Jersey Real Estate | 43 Comments

King of the hill, top of the heap.

Posted on June 26, 2017 by grim

From the Star Ledger:

Recent college grads are leaving N.J. in record numbers. Here’s why.

The bed is on an elevated bunk. Below the bed is a desk, dressed with items from college: clothes, books and accessories. The floor is barely visible beneath a slew of still-stuffed bags of clothes.

In 2016, Dina Bardakh, 23, uprooted her life from Hunter College, along with the degree in political science she received, and plopped down inside the 273-square-foot room of her mother’s two-bedroom modest apartment alongside the Hudson River.
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“I never unpacked,” Bardakh explains. “I never imagined myself back here for as long as I have been. So, what do you do then?”

Bardakh is not the only one asking that question. As another college graduation season comes to an end, and a whole new set of millennials enter the job market, the prospect of recent graduates simply moving out of their parents’ homes is dimmer than ever. According to Census data, 47 percent of 18-to-34-year-olds in New Jersey were still living with their parents in 2015, the highest rate in the country.

The situation shows little sign of improving, either: Data released earlier this month by the National Low Income Housing Coalition says tenants need to make $27.31 an hour, the seventh highest in the country, to afford the average two-bedroom apartment in New Jersey. That makes it virtually impossible for someone making an entry-level salary to afford his or her own place, at least not without teaming up with multiple roommates and/or forgoing other necessities.

Meanwhile, higher education funding has dropped nationwide, including 23 percent in New Jersey from 2008 to 2015. The resulting increased student debt is also keeping many recent grads stuck in their parents’ places.

“It is sort of unprecedented, we would have to go back generations, to come to this situation where grown children live at home to the extent that they are today,” said Dr. James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University.

In recent years, many frustrated college graduates are giving up the promise of adult life in the New York-New Jersey area altogether. According to the 2007-2014 American Community Survey, 111,674 people age 18-34 moved out of New Jersey, the highest number for an age group in the state.

“I was really hopeful when I started going to college,” Bardakh said. “It was New York City, the capital of the world. I thought there was going to be so many opportunities.”
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According to Hughes, the downward trajectory began with the financial crisis of 2008, the repercussions of which are still being felt by young people.

“That set back many millennials in their economic progression or career trajectory,” he said. “They may have been unemployed for awhile, under employed or coming out of college. They lost several years of earning growth power during that time period.”

This also means young people just getting out of college find themselves this spring now competing for entry-level jobs with people who graduated years earlier.

McKoy said the Garden State is facing an even harsher burden than most states.

“This is definitely a nationwide issue, but New Jersey is a little bit more drastic because it is a very, very expensive place to live, and this is happening at a time where wages are pretty much stagnant and most people in that age range, especially on the lower half, would be working around minimum wage jobs,” he said.

And, says Hughes, “when you have such a powerful trend such as this, there are no silver bullets to change it. At best, some policies could deflect it slightly.”

Posted in Demographics, Economics, New Jersey Real Estate, NYC | 52 Comments